In a barter economy, the difficulty of making deferred payments arises primarily because g… — JAMB UTME

In a barter economy, the difficulty of making deferred payments arises primarily because goods used in exchange fluctuate in value and are prone to perishability over time.

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True. In a barter system, commodities lack value stability and long-term durability, making fair deferred (future) payment contracts unreliable.

The statement is true because physical commodities traded under a barter system lack long-term stability in value and durability, hindering fair credit agreements and future debt settlements.

Step-by-Step Solution

Identify the specific limitation of the barter system being evaluated in the statement.

The statement highlights the problem of making deferred (future/credit) payments in a moneyless system.

Deferred payments require an agreed-upon standard that holds consistent value over time.

Analyze the physical and economic properties of commodities traded under barter.

Commodities such as agricultural goods or livestock suffer from spoilage, quality degradation, and fluctuating supply conditions.

These physical and market changes alter the commodity's real value over time, creating risk for creditors or debtors.

Conclude the truth value of the stem based on economic principles.

The statement is true because the lack of durability and value stability directly creates the deferred payment drawback in barter.

Money resolves this exact flaw by functioning as a durable and standardized unit of deferred payment.

Key Concept

Standard of Deferred Payment and Barter Limitations

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